Good Afternoon 👋
And on we go… Another day, another record high. The rhythm continues to be the same —> Low volume because its the summer plus earnings season but also no sellers so what’s the price going to do? On the economic front, we had some more inflation numbers as well as updates on jobs. PPI Numbers came in hotter than expected increasing 1% for the month of July. This means that manufacturers are selling their products/services higher to the consumer. Jobless claims which measure how many people filed for unemployment benefits during the past week came in right at the expected number of 375k, continuing its steady downtrend.
Cryptomarkets finally came to a pause after a nice multi-week rally. July 20 seems to be the bottom for now as the market has taken off considerably, sitting at $1.87 Trillion total market. If we get some price consolidation and support here, cryptos will definitely not be over with the rally. let’s hope for the best!
Headlines
👨⚖️ Fed Taper Coming Soon? The Federal Reserve will announce a plan to taper its asset purchases in September, according to a solid majority of economists polled by Reuters. Since the last U.S. jobs report, which showed an unexpectedly sharp decline in the unemployment rate to 5.4%, economists have been calling for the fed to stop their asset purchase program. Some respondants are saying that September is very unlikely but if job reports continue to be strong for the next couple of months, it would not be a surprise that we see the fed finally taper before year end. More details from (Reuters).
🤑 Fund Managers bet on transitory inflation Fund managers interviewed on the Reuters Global Markets Forum are still repositioned in risky assets. With the world stock index hitting new highs today, it comes as no surprise that seasoned investors are staying overweight in equities. UBS CIO advised they are positioned for some inflation stating they support the street view that the rise of prices is a short term dynamic. The street view is that the Fed will pay more closer attention to the pockets of the job market that seem to be still very beaten up by the pandemic. Timelines on when and how to taper remain inconclusive as a group. Details from (US News).
Without further delay, the tale of the tape:
Tale of the Tape
As of 08/12/21 close.
U.S Markets
📈 Markets, Rates and Volatility (VIX) Markets today seem to be rewarding technology and growth side of the trade with Healthcare and Tech sectors leading the way. The Nasdaq climbed almost all day from the red and ending up 0.36%. Investors are repositioning their positions as more growth companies report quarterly earnings. Nevertheless, DOW made new highs and SP500 is well near all time highs as well. Rates could also be a culprit here as the 10yr failed to break that 1.37% previous high thus retreating to the 1.35% area. Volatility (VIX) broke the 16 level well into the 15.5’s. As mentioned in my last edition, if volatility can continue to drop, the market will break more all time highs. Traders/Investors are sticking to the rotation narrative so given the many earnings scheduled for this week, cash will most probably be repositioned to gain exposure to these companies. Actually just yesterday, FactSet released a report that SP500 earnings growth for this quarter has been the highest in over 13 years, driven mostly by energy’s big upside. Expect market participants to follow the trend. Like I said earlier, only net buyers in this market.
Here’s a look on every sector in the S&P500 from SPDR.
⚠️ The Wall of Worry In this fast paced market, it is key to note the themes that seem to be impacting stock market performance so that we keep track of its progress and can inform ourselves to tactically adjust. In my opinion, these are the most important issues that are keeping volatility and market rotations in place.
Updates as of 08/12/21:
Inflation Sentiment: PPI numbers for July came in hotter than expected, which sent rates upwards.
Delta Variant Strain: No relevant updates.
Job Market Recovery: Jobless claims dropped to 375k, marking another consecutive week of less unemployed benefits being submitted.
Fed Tapering: Fed officials continue to go back and forth but it seems like the majority of the Fed wants to taper in September. Ultimately, Fed Chair Jerome Powell will decide, which we will hear in Jackson Hole in 15 days.
Peak Growth & Asset Prices: No updates.
Check the Full U.S Economic Calendar (Here).
Earnings Today
📦 Wish American online e-commerce platform reported Q2 Profit down YoY to $-111M but revenue that increased to $657M in the same period. the CEO reiterated that the company had some challenges with the reopeningand how thats driving down traffic but remains optimistic about the future and they certainly have enough cash to do it now. Shareholder Letter from (WISH).
🎡 Disney This one certainly doesn’t need an intro, the company reported a strong quarter on both the top and bottom lines. Most notably, the Theme Park & Entertainment media division pulled in a 100% YoY growth in revenue, which absolutely crushed wall street’s predictions. Parks, Hotels, Restaurants, even Disney+ are all booming! See full report (Here).
Check the Full U.S Earnings Calendar (Here).
Corporate News
🎰 Sports Betting to debut in Canada Single name sports betting made its way to the Canadian territory with legislation coming to effect on August 27. Canadians have been spending around $10B in betting that has all gone to the black market. Although this is just a start, it represents a step forward in safe, state regulated betting. More details from (CBC Canada).
🇵🇪🇲🇽 Peru & Mexico Raise Rates Inflation is looming in South & Central America as countries struggle to fight off the world economic dynamics and just how quick the consumers got back to the streets with spending vengeance. Both Peru and Mexico raised rates in efforts to pour a bucket of cold water in spiraling prices. More details from (BBG).
💉 FDA Approves Covid Vaccine Booster The FDA has just stated late thursday that vaccine boosters have been approved and will be available for those that have a weak immune system or part of the “at risk” category. More details from (CNBC).
Meme Headlines
Disclaimer: I am not a financial advisor. This is not a recommendation to buy or sell any security. When investing, always do your own research and asses your own risk.